Stocks
Asian markets track tech-led plunge on Wall St, yen extends gains
Asian markets tumbled Thursday after a tech-fuelled sell-off saw Wall Street tank, as disappointing earnings caused traders to panic that a months-long rally in the sector may have been overdone.
Tokyo’s Nikkei led the retreat in equities, with a stronger yen adding to the downward pressure on exporters, while technology giants across the region were deep in the red.
Global stocks have pushed ever higher this year — with New York’s three main indexes hitting multiple records — with tech titans such as Alphabet and chip makers such as Nvidia and TSMC boosted by an explosion of interest in all things linked to artificial intelligence.
The rallies have been helped by blockbuster profits and upbeat outlooks, causing investors to pile more cash in owing to a fear of missing out.
However, with valuations pushing to dizzying heights, analysts have been warning about retreat, and Tuesday’s earnings from Tesla and Google-parent Alphabet provided a selling opportunity.
Tesla said profits fell 45 percent in the second quarter owing to price cuts and aggressive AI investment and while Alphabet beat forecasts, results from YouTube were less upbeat.
The two firms are part of the so-called “Magnificent Seven” tech kings who have been key to the driving gains in markets this year. Tesla shed 12.3 percent and Alphabet gave up five percent.
All three main indexes on Wall Street tumbled, with the Nasdaq shedding more than three percent and the S&P 500 down more than two percent in its worst day since December 2022.
“Investors are now facing the pressing question: How long will it take for these massive investments by hyperscalers to start delivering over-the-top results?” asked analyst Stephen Innes.
“Patience is becoming the new flag-bearer for recent tech stockholders as they wait for these tech bets to pay off,” he added in his Dark Side Of The Boom newsletter.
Asia followed suit, with tech firms among the big losers — Seoul’s SK Hynix dived more than eight percent at one point despite strong earnings, while in Tokyo Sony was off more than four percent and SoftBank more than seven percent.
Hong Kong and Shanghai fell even after a surprise cut in a key rate by the Chinese central bank.
Sydney, Seoul, Singapore, Wellington, Manila and Jakarta were also well in the red.
The Nikkei in Tokyo tumbled more than three percent at one point.
Hideyuki Suzuki, senior analyst at SBI Securities, told AFP that “falls in the US tech sector — especially a plunge in Tesla shares, and disappointing Alphabet earnings — as well as a stronger yen weighed on the market.”
The boom in electric vehicle sales is slowing, and “excessive expectations for AI and other technologies are being corrected,” he said.
However, he added that “it’s not that economic fundamentals are worsening, so shares may rebound after” Japanese and US central bank meetings.
“The yen is higher on speculation that the Bank of Japan may hike interest rates” at its meeting next week, but views are divided, Suzuki said.
The yen extended a rally against the dollar that has been underway in recent weeks, having hit a nearly four-decade low near 162 at the start of this month.
The Japanese unit strengthened to as much as 152.65 per dollar at one point, with Innes saying “traders seem to have shifted from squaring short yen positions to taking long yen bets” ahead of the meeting.
Market watchers are divided on whether Japan’s central bank will raise interest rates again as officials look to normalise their longstanding ultra-loose monetary policy.
– Key figures around 0230 GMT –
Tokyo – Nikkei 225: DOWN 2.5 percent at 38,165.19 (break)
Hong Kong – Hang Seng Index: DOWN 1.5 percent at 17,058.26
Shanghai – Composite: DOWN 0.9 percent at 2,875.61
Euro/dollar: DOWN at $1.0839 from $1.0842 on Wednesday
Pound/dollar: DOWN at $1.2890 from $1.2905
Dollar/yen: DOWN at 152.89 yen from 153.99 yen
Euro/pound: UP at 84.09 pence at 84.08 pence
West Texas Intermediate: DOWN 0.4 percent at $77.30 per barrel
Brent North Sea Crude: DOWN 0.4 percent at $81.40 per barrel
New York – Dow: DOWN 1.3 percent at 39,853.87 (close)
London – FTSE 100: DOWN 0.2 percent at 8,153.69 (close)
Reviewing the U.S. Stock Markets, the Nasdaq Composite, recorded a decent loss of 1,023 points, reaching a closing value of 16,690 points by the end of the week. Similarly, the S&P 500 index showed a positive trend, losing 240 points to settle at 5,408 points. Meanwhile, DJIA Index experienced a notable hike, adding 1,218 points during the week and concluding at 40,345 points after a week of gaining.
In contrast, Russell 3000 Index saw a loss in week performance, with a slight drop of 141 point to reach 3,077 points by the end of the week.
Moving to Russell 2000 Index, demonstrated a notable lost of 126 points, ending the week at 2,091 points.
In the Outgoing week, the European stock market displayed a mixed performance.
Here is the data on the weekly performance of the European Stock Market, The STOXX Europe 600 index, which is considered a leading benchmark for the European market and covers approximately 90 percent of the market capitalization across 17 countries, reported a loss of 18.49 points to close at 506.56.
The United Kingdom’s FTSE 100, one of the most widely followed indices in Europe, also showed a significant drop, losing 195 points or finishing the session at 8,181.
In Germany, the DAX 30 index, added by 605 points to reach 18,301, while France’s CAC 40 decreased by 278 points to stop at 7,352 at the end of the trading day.
Italy’s FTSE MIB, which covers the top 40 stocks traded on the Milan Stock Exchange, decreased by 1,081 points to 33,291. However, Spain’s IBEX 35, lost by 228 points, to close at 11,173.
A review of South Asian stock markets shows that India’s Bombay Stock Exchange (BSE) index BSE Sensex has lost 1,182 points during the week. At the end of the week, the index stood at 82,365 points. On the other hand, the Nifty-50 index of the country’s National Stock Exchange dropped by 383 points last week. At the end of the week, the index stood at 24,852 points.
Pakistan Stock Exchange Index ‘KSE 100’, added 459 points last week. After a week of losing, the index settled at 79,002 points.
On the other hand, The Sri Lankan stock market index loss, and the Colombo Stock Exchange index ‘ASPI’ decreased by 94 points in a week. After a week the index settled at 10,775 points.
Bhutan’s stock market index ‘BSI’ dropped by 9 points hence the index stood at 1,500 points throughout the whole week. Nepal’s ‘NEPSE’ lost 22 points, therefore the index stands at 2,727 points.
Hence Dhaka Stock Exchange: The benchmark index ‘DSEX’ lost by 75.77 points or 1.31 percent, in the outgoing week. At the end of the week, the index stands at 5,728 points.
